Tough for bakers to make dough with winter wheat shortage

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Dive Brief:

Heavy spring rains, falling demand, and the smallest winter wheat crop in more than a hundred years have resulted in a high-protein wheat scarcity, according to Bakery and Snacks.

Drenching downpours in Kansas, the largest producer of winter wheat in the U.S., have decreased the protein levels in wheat, which thrives in more arid conditions. This creates a problem for bakers who need the higher protein level to create an airy texture consumers expect.

Millers have been able to pass along the elevated cost of in-demand high-protein flour to bakers, but bread makers have been unable to recoup the cost when selling to retailers. Grocers are unwilling to pay more for bread, as consumer demand is dropping and a price increase could drive sales down.

Dive Insight:

It's been a rough couple of years for farmers and bakers.

U.S. consumption of wheat flour in 2016 fell to its lowest level in close to three decades. In addition, American farmers planted their smallest winter wheat crop in more than a hundred years.

As is the nature of supply and demand, farmers who did yield high-protein winter wheat are charging a premium. This escalated cost is passed along the production chain, but ends with bakers. They've largely been unable to charge retailers more for their rolls and loaves, thanks to decreased consumer demand.

If there is another season of high-protein wheat scarcity, though, the price of the average loaf of bread may increase.

Bread manufacturers have been able to cope with using the less expensive low-protein wheat by re-formulating recipes. By adding gluten, whose price has increased 20% thanks to demand, many bakers are able to create the same light texture consumers expect. But once again, they absorb the cost of research and development, and the pricier gluten.

High-protein winter wheat accounts for about 40% of the $10 billion U.S. wheat crop.

Wholesale bakers like Grupo Bimbo, Flowers Foods Inc and Campbell Soup Co's Pepperidge Farms have already seen profits suffer. The squeeze on their margins will only continue, until a robust crop of high-protein winter wheat is produced.

If bread sales slide as a result of the shortage, it could be beneficial to manufacturers that make bakery products without wheat flour, such as Udi's and Food for Life. In addition, alternative flours such as brown rice and millet varieties, could see increased demand.